The Car Buying Pandemic

by BTM

Sun, 04 October 2020

Distributors complain of low walk-ins and overall sales; Have you bought a new car recently?

There used to be a time when purchasing a car was a ceremony that you’d remember for the rest of your days - a tale you’d tell friends and your kids. Fond memories of the time you walked into that showroom, cast your eyes upon that gleaming amalgamation of glass and metal, and fell in love. You’d pay through your nose for it, but it didn’t matter - that car was going to serve you for the foreseeable future and who knows - maybe you’d even pass it down to your kid as his or her first car.

Things have changed quite dramatically since the last time that statement rang true; today most cars are made to be replaced by the end of their warranty period, and even if it isn’t traded-in or sold, technology will make it obsolete in seven years regardless of how well-made it was from the factory. This technology-based-obsolescence ideology of requiring repeat consumerism has begun to permeate into the car buying experience as well - and dealerships (whom this article is mainly intended for), have been caught off-guard - rapidly ushering in reactive rather than proactive strategies that are in most cases - too little, too late.

For those of you not in the know, the physical showroom where you purchase your car from is owned by a privateer. This could be a family-owned concern or a corporate chain. They develop the infrastructure according to the guidelines set forth by the manufacturer, employ the staff and then “purchase” the brand’s cars from the factory - usually with good credit terms worked into the deal. The distributor then marks-up said car (known as the MSRP Stateside) and sells it to you - the end buyer, or, in bulk to companies (such as rental agencies) - also known as a “Fleet sale”. The mark-up is how the distributor makes their money and pays for their overheads. Essentially - you the buyer are footing the bill for said mark-up.

The traditional distributor model has worked well till the virus threw a spanner in the works - ‘well’ being a subjective word, since research has shown that there is a growing amount of resentment among the car buying public and their overall experience at new car distributors. From not being attended to by sales consultants to being price-gouged, having unnecessary accessories tacked-on, or being flat-out deceived; if you’ve ever purchased a new car on more than one occasion, you already know the drill. Having been on both sides of that equation, I can confirm all those elements and add a few unflattering tales myself. If you’re wondering how the car buying process has turned into such a regrettable experience, the answer is simple:

A top-down approach to operations at almost every single distributor the world over. The distributors need to keep up certain volume targets (meaning they must be able to order a minimum number of units every quarter) that are imposed by the manufacturer. This inevitably causes the distributor to push sales targets that are thrust upon the sales consultants. When said targets remain unmet for a certain period of time, negative pressure forces sales consultants to become vigilante rock-stars doing deals in ways that would make Jordan Belfort proud. In many cases, folks at the top are completely tone-deaf to the fact that their offerings are either uncompetitively priced, or that the brand simply hasn’t been built up with enough credibility in that locale to pull the sort of volume that they’re looking for.

I’m not going delve into fixes since I’ve strayed too far away from the bottom-line of this article already - but I hope you’ve got the gist of the issue, if you haven’t experienced it first -hand already.

I’ve been trying to buy a new car recently, and because of work, the pandemic and various other engagements, I’ve been unable to find the time to go through the process of physically walking into a showroom, looking at the cars on offer, listening to the sales consultant’s pitch, test driving the car and then (worst case scenario) not liking the car or wanting to look at other options. And lest we forget - there’s also the little matter of exposing myself to the risk of contracting a virus that could kill me. In addition, for some reason (in Bahrain at least) most showrooms tend to be closed on weekends and past 7pm just as you’re able to get off work, battle rush hour traffic and pull into the parking lot. Convenient. It’s almost as if car distributors here believe that their customers do not work jobs that require being in-situ and can basically wander off for half a day to buy a car.

This being the case, I did the only rational thing any human being in today’s ever-connected world would do - and that is to hop online, do my research, shortlist a few cars that meet my criteria, and then look through every local distributor’s website for those exact vehicles.

This is where things get maddening in a hurry:
Are the websites up to date? Not a chance (in a few cases non-existent). 
Are the models featured on the website available in stock or with the options, or even in the color that a potential buyer would be looking at? You’re lucky if they did. 
Are current prices and / or promos mentioned? Nine times out of ten they’re outdated.

Is all the information of the specific car mentioned? Nope - but you can get a PDF brochure sent to you - once you enter your email and contact details and surrender to an errant sales consultant calling you in the middle of working hours for a car that you haven’t even been able to consider yet. 

Are the websites mobile-optimized? Depends on how proactive and switched-on that specific distributor’s marketing department is. Sure, you can book a test drive online. In many cases you’d be lucky to receive a call back confirming that booking or any response at all for that matter. 

I’m almost baffled by how poorly thought-out and executed the digital side of things are when it comes to new car dealerships in Bahrain. Distributors seem content on investing time and effort into social media campaigns and promotions, but have completely over-looked the follow-through aspect of the game - which is the actual buying experience. We all talk about going digital or increasing our digital presence, but do we really understand what that entails? You can never get good at tennis without following-through on your swing; Similarly what is the point of all the advertising and social media campaigns if a potential buyer still has to call the switchboard, listen to five minutes of pre-record, make ten selections only to have the receptionist answer the phone, ask you three more questions, then transfer you to a sales consultant who doesn’t answer, whereupon the line is transferred back to the receptionist who then transfers you again or simply gets your mobile number with the customary “we’ll call you back”  line - which of course happens rarely - if ever. All this is assuming you called during what we all figure to be working hours - if you called during the showroom’s lunch hours which only they know of, you’re sold out of luck on an answered telephone. “You can bring a horse to water, but you cannot make it drink” seems to be the modus operandi. 
And yet, enquiries are hard to come-by and sales are down. Perhaps the sales consultants require more pressure?

Tesla broke the traditionally-established mould of the car-buying experience when CEO Elon Musk made the decision not to franchise the brand out to privateer distributors. By eliminating the middle-man, Tesla accrued a whole new set of challenges, but sealed the success of the electric car brand. It was a refreshing change for customers to be able to hop online to Tesla’s website, select the model they wanted, research the selected model, build it, customize it, and pay for it - essentially closing the deal. The car is then delivered to their address by Tesla within a few weeks. Most Tesla buyers don’t even think about getting a test drive because Tesla makes sure that their cars are reviewed by every media outlet in the world including every YouTuber they can find. Ask a 12-year-old what the fastest Tesla is and they’d tell you it’s the Model S without taking their eyes off their iPad. 

The recipe to increased sales and competitive advantage in a COVID-changed world is simple - appreciate the past, embrace the future. Even Tesla has brick and mortar dealerships - albeit run by Tesla themselves and in far fewer locations (they’ve got one in Dubai).

Here’s what car dealerships can do to improve the experience:

Embrace technology: Put your inventory online. Invest in a decent IT company that can build your very own portal capable of sustainably hosting features such as a car configurator, the ability to reserve a car in your stock with online payments - and the option to buy the car outright. The added cost of hiring three receptionists just to fill in for each other’s breaks, the odd working hours, necessity to open on weekends - all rendered moot through efficient investment in technology. 

Appreciate the past: Does this mean you have to fire your entire sales team? Certainly not - but most likely a large part of that team. Information on any car is freely available online in near any language that you can dream of. The traditional “sales consultant” role is an obsolete one. Rather, what new car dealerships need is a Customer Administrator - a friendly, technically qualified, well-trained individual whose main priority is to assist customers who walk-in. Towards the end, the customer is simply guided toward completing their purchase digitally - either using digital outlets on the showroom floor or from the comfort of their own home or office.

Go mobile: Roll the website into a web app or a mobile application and updated - you know so everyone has access to your digital showroom wherever they are. Makes sense yes? Have a live control panel manned by a two-member expandable (not expendable) team that actively monitors customer requests and can intervene and respond in real time. Now that’s what I call effective customer service.

Get Social: No, not by dealer-reps and sales consultants talking about your cars telling people how good they are. Throw the keys of those demonstrators to local YouTubers, media outlets and Auto Consultants (like me). These folks are the ones who non-car people come to for car buying advice and more often than not, they’ve got a decent fan following as well.  Make the brand and its offerings a comfortable main-stay on the local online community. Engage with the community rather than continuously throwing promos at them from the social media desk.

Make it easy: Test drive? Drop the car off at the customer’s home or office; same for a new car delivery. Service? A mobile service van equipped with quick-jacks can perform basic services at the customer’s residence or office. Same goes for a car wash.

Change the mindset & the culture: It all starts with the mindset of the people working in the organization. In my opinion, having worked closely with near every automotive concern on the island, I’ve come to realize that people dislike change - and this mental discord is the in-elastic death warrant of any organization trying to float during these exigent market conditions. 

The take-away here is that you don’t have to completely demolish the establishment to make any progress - rather start by demolishing the haggard process that seems all too happy to keep the past going like those “I love the 80’s” Facebook groups. Is there anything wrong with that? Absolutely not. Should we keep living in the past? I don’t think I need to answer that. 

Need car buying advice or industry-specific consultation? Email me on
[email protected] or DM me on instagram - @sangeeth911